Post your Resources: Protect yourself as a host from Charge Back.

[AndrewMKP]

Hello All.

 

It would be a good idea for all us Hosters to put information up on how to protect yourself in regards to charge back through gateways such as PayPal for example.

 

This happens quite a bit and so far I have been unsucessful to stop customers from claiming back money (Only around 4 in my years of experience though).

 

So, if a client signs up for hosting, pays through a gateway (PayPal for example), after using all their bandwidth/space they are suspended in WHMCS and asked to pay extra fee's. The client then goes through the Gateway and files a claim to get the money back.

 

Now although the customer agree's to your terms and conditions which most will say and cover us on this the Gateways often give the money back to the customer and you have lost your money for resources.

 

How do other people go about stopping these people who are real pains. Are their Gateways out there that do not 'Automatically' make the customer win because it is a virtual product?

 

Your contributions & thoughts...

[cafreamoroso]

we deal with this in the past. so now what we do is to transfer all the money asap from the public paypal account to a more private paypal account where all the withdrawals are made... that way we keep the account allmost close to zero all the time, we have had clients that ask for their money back, so in that scenario, paypal just sends us some emails, which can be answered to clear things up, as we attach our SLA, and our terms of use, privacy policy, contracts signed by our clients and other legals, paypal has voted in favor or us all the times this has happened, at least 5 this year.

[AndrewMKP]

Really? So it is best to get documentation attached and show what they agreed to?

 

Does this have to be signed by the client though or will it say something like you agree to these when you make an account with us for example?

 

Kind Regards,

 

Andrew.

[cafreamoroso]

this really has saved us like some thousands in refunds... proven method...

 

All clients agree to this service terms on checkout: .. we attach screenshot.. and copy of text....

 

 

our account has never shown any weird status or restriction in this manner.

[DennisG]

You should be covered in the fore mentioned method or make sure you have a Service Level Agreement signed up front. It does help.

[handsonwebhosting]

Be aware that with PayPal, even if it was 1 year later, if a client reject the charge 1 year later, the client will receive their money. We recently had a customer of ours experience this with another client. The bad thing was that their PayPal account was hooked to their bank account, so when paypal had no money, it pulled from the bank account. The back account didn't have the money to cover the refunded fee, so then the bank hit them with an overdraft fee. Can get really expensive really quick.

[AndrewMKP]

Be aware that with PayPal, even if it was 1 year later, if a client reject the charge 1 year later, the client will receive their money. We recently had a customer of ours experience this with another client. The bad thing was that their PayPal account was hooked to their bank account, so when paypal had no money, it pulled from the bank account. The back account didn't have the money to cover the refunded fee, so then the bank hit them with an overdraft fee. Can get really expensive really quick.

 

How do you protect yourself from that then? What did they claim a refund on?

[handsonwebhosting]

How to protect it? No idea

 

Basically the issue with the client was that their customer had initiated an INQUIRY with PayPal to find out who charged them "X" dollars last year. PayPal immediately refunded the money to the client pending the inquiry. It all got sorted in the end and the customer did ACCEPT the charge, but initially the monies were pulled and they got hit with fees from their bank for the overdraft.

 

How to stop something like that - I have no idea.

[Drac0]

but initially the monies were pulled and they got hit with fees from their bank for the overdraft.

 

How to stop something like that - I have no idea.

 

Keep more money in the bank account?

[R-n-R]

If you have someone that is a "problem" you really need to learn to "fire" your customer. I am lucky and only had to fire only one customer since I have been in business.

 

Their seems to be places so customers can check on a host before doing business with them. How about a place to go check on a customer before you hire them to be your customer?

[AndrewMKP]

Yeah good point.

 

The only issue with hosting is that when the customer tries to recover funds through paypal the investigation and money can be started without your consent, thus money taken from your account and often they are still using your hosting services if you do not check paypal daily. How do you 'fire' a customer?! Just refuse to offer them service?

 

I still think the Terms of Service is a good idea however you can't get everyone to sign it... So my question is will PayPal still accept terms of service because last time I checked they didn't care about mine and issued the guy a refund?!

[msmom]

So far the only ones that I have had ask for their money, I have agreed to immediately. I guess I'm not a fighter One, I knew the customer was wrong, but it wasn't worth my time to fiddle with it.

 

I'm watchful of the orders as they come through. If something looks wrong, it probably is. I had two fraud orders slip through, and immediately refunded the card that was charged and killed the account. I haven't heard anything on those two (yet).

 

This resource may be helpful

 

http://merchant911.org

[uberhost]

So far the only ones that I have had ask for their money, I have agreed to immediately. I guess I'm not a fighter

 

Sometimes it just makes more sense to write it off and forget about it. Time is money, and getting into a battle over a small amount costs more than simply refunding and moving on.

[Lawrence]

Keep more money in the bank account?

Considering how the process for adding a bank account to your PayPal clearly states no transactions will be made using that account without your prior authorization, I do not see how they have any legal right to attempt to pull funds from a bank account without prior consent. A situation like that sounds like a lawsuit waiting to happen, in my opinion.

[AndrewMKP]

Lawrence could you explain a little more?

 

Are you saying PayPal are breaking the law?

[handsonwebhosting]

Interesting - I'll have to read through their policies a little more and see if I can get a leg up for the client. As for the "breaking the law" - I don't think it's a LAW that they're breaking, but potentially their own policies which would be an interesting thing

[AndrewMKP]

Interesting - I'll have to read through their policies a little more and see if I can get a leg up for the client. As for the "breaking the law" - I don't think it's a LAW that they're breaking, but potentially their own policies which would be an interesting thing

 

Thanks for your interest, what did you find out? Anything interesting in the end?

 

I agree that they won't be breaking the law, however lawrence does have a point that they take money from your account without consent, although you probably agree to it in the terms and conditions.

 

So Handsonwebhosting, find anything of interest?

 

Kind Regards,

 

Andrew.

[DeiseHost]

I have been faced with quite a few chargebacks over the years and more recently I have been successful with a few.

PayPal's policy is they do not have seller or buyer protection for virtual goods. Therefore, when I receive an email from PayPal notifying me that there is a claim open, I contact them immediately with some information as such, which was mentioned earlier in this thread:

 

1. Screen shot of our Refund Policy

2. User Agreement, if applicable

3. Text copy of our Terms

4. I highlight PayPal's policy on Virtual goods and indicate that the claim is in relation to such a purchase. Seems to work.

 

Hope this helps.

[AndrewMKP]

That's a fair point actually, so in a sense we could use the policy back against the customer?

 

On what ones have you failed then as you said you were only successful with some?

[Lawrence]

Lawrence could you explain a little more?

 

Are you saying PayPal are breaking the law?

 

They are probably not breaking the law per se, but they clearly state (at least for us Canadian clients) during the bank card addition process (before the deposit confirmation) that they do not use your bank account without your permission. I forget the exact wording, but the document also mentions using Wells Fargo for Royal Bank of Canada transfers (if someone is searching for it).

[DennisG]

If you worry about the dreadful chargebacks find a provider that has a good chargeback guarantee.

[AndrewMKP]

Dennis, in that case who would you suggest then?

[NetworkOfHosting.com]

How do you protect yourself from that then? What did they claim a refund on?

 

Thus the beauty of "No chargebacks "Get paid, stay paid"" services like e-gold, eeeCurrency, and Liberty Reserve.

 

We've bought a copy of a eeeCurrency mod that another whmcs user had done and we're looking to get liberty reserve (increasingly popular and reliable these days) done for our whmcs installation.

 

Payment services like these favor the "merchant", and is used by clients who understand the no chargeback policy, using the service for various reasons such as privacy (I know, I know) and has worked well for us.

 

NOH

[studeggle]

Actually they are breaking the law, at least in the US. Now its not a law that will get them thrown in jail mind you, but it is petty larceny.

I have recieved bank information for many clients, but that does not entitle me to just take funds whenever I feel like it. I must have there consent prior to removal of the funds. You did not provide them (or at least I didn't when I signed up) a blank permision slip to take whatever they felt like, all amounts must be approved.

 

The one time Paypal did try this act with me, a quick letter to them immidiatly (@30min)resolved the situation including the overdraft fee. And they knew they were in the wrong so even paid the overdraft fee without any request of proof that there had been one or of the amount. Just took my word that there had been one. And there has never been a repeat in the 5 years since. My Paypal has had a negative ballance a few times but regardless of how long its negative they never touch my bank or credit cards.

[AndrewMKP]

Thats actually a very good point.

 

So even when people make a claim against you, you just basically tell paypal that removing funds from your account is not allowed?

 

Won't they penalise you because of that?

 

Regards,

 

Andrew.